What Is FAFSA and How Does It Work?

What is FAFSA

What Is FAFSA and How Does It Work?

Published November 11, 2021

What is FAFSA

The Free Application for Federal Student Aid (FAFSA) is one of the most important components of the college application. This document is what schools use to determine how much financial aid they will offer to your child. 

It’s essential to complete and submit the FAFSA when your child is applying for college, even if you think your financial circumstances may not qualify for assistance. Not filling out the FAFSA may affect your child’s eligibility for multiple types of aid, including merit scholarships.

What Is FAFSA?

FAFSA makes it easy for universities and colleges to get all the information they need about your finances so they can decide what type of financial aid to offer your child. Submitting the FAFSA is required to be considered for:

  • Federal grants (e.g. the Pell Grant)
  • Federal work-study programs
  • Federal students loans
  • State scholarships
  • Scholarships offered by colleges and universities

Is FAFSA Free?

It’s completely free to fill out and submit the FAFSA, and it’s available to every U.S. citizen (and some non-citizens). 

What is FAFSA Used For? 

The information you provide is used to calculate your Expected Family Contribution (EFC). This is the amount that the government assumes you can contribute toward your child’s college expenses.

The formula that’s used to calculate EFC incorporates several factors:

  • Oldest parent’s age
  • Number of children in the family in college
  • Household size
  • Financial income and assets (both the student’s and the parents’)

The FAFSA Simplification Act, which was passed in 2021, will cause some changes to the process starting in the 2023-2024 academic year. Most notably, the EFC will change to become the Student Aid Index (SAI)

This is mostly a semantic change intended to avoid some common misconceptions about the EFC (such as that the EFC represents the highest amount a family will have to pay for college). However, there will be some minor changes to the formula that may be better for low-income families, and disadvantageous for middle- or high-income families.

Who Should Apply for FAFSA?

It’s a good idea for every college applicant to submit the FAFSA, even if they might not qualify for need-based financial aid. 

Some high-income parents don’t fill out the FAFSA because they think they are ineligible for income-based financial aid. However, not submitting the FAFSA can keep your child from being considered for some state and institutional scholarships as well as work-study programs. 

The FAFSA is technically your child’s paperwork, but you may wonder whether you or your child should fill it out. According to the Federal Student Aid Office, a parent must include their own financial information and sign the form if their child is considered a dependent. 

In reality this means that many parents fill out the FAFSA for their children. However, your child will still need to sign the form. You and your child will each need a unique Federal Student Aid ID (FSA ID) in order to sign in to the online portal, access the FAFSA, fill it out, and e-sign it.

Divorced Parents and FAFSA

What happens if you are no longer married to your child’s other parent? The FAFSA process can be a little complicated for divorced parents

Under current rules, if your child lives with you, your financial information needs to be on the FAFSA. If your child splits their time equally living with you and with your ex-spouse, then the parent who provided the biggest financial contribution during the previous year is the one who should fill out the FAFSA.

However, things will change slightly starting in the 2023-2024 academic year, due to the FAFSA Simplification Act. Under the new rules, where your child lives doesn’t determine who should fill out the FAFSA. The parent responsible for filling out the FAFSA is simply the one who provides more financial support to the child.

How Does FAFSA Work?

You’ve decided to help your child fill out the FAFSA. Start here. You can save your progress on the form and return to it, so you don’t have to complete the whole thing in one sitting.

When you’re done, just sign electronically. If you prefer to fill out and mail a paper copy of the FAFSA, you can.

FAFSA Deadlines

When should you apply for FAFSA? Each university and college determines its own financial aid deadlines. However, the federal FAFSA application window opens October 1st and closes the following June 30th. So, for example, to apply for aid for the 2022-2023 school year, you would submit the FAFSA sometime between October 1st, 2021, and June 30th, 2022.

It’s generally best to turn in the FAFSA as soon as possible; those who file earlier may receive more grant money than those who apply toward the end of the window. Additionally, many states and colleges have scholarship deadlines that are far earlier than June of the school year in question.

What is a FSA ID? 

The first step in filling out the FAFSA is obtaining a FSA ID. You’ll need to apply for one for yourself, and your child will need to apply for their own. You should not create an FSA ID for someone else.

What Do You Need to Fill Out FAFSA?

Once you and your child have your FSA IDs, you can start filling out the FAFSA.

Here’s the data you’ll need:

  • The Federal School Code for each school your child will apply to
  • Your child’s personal information: Social Security number (or Alien Registration number) and driver’s license number (if applicable)
  • Your personal information: Social Security number (and your spouse’s SSN, if applicable)
  • Your child’s financial information: tax returns/W2s, details of untaxed income, savings accounts, and other assets
  • Your financial information (and your spouse’s, if applicable): tax returns/income documents, records of retirement plan withdrawals or other untaxed income, financial assets, investment accounts, and savings accounts

For the FAFSA, you’ll use your tax records from two years prior (e.g. use 2019 income information for the 2021-2022 FAFSA form). 

The first section of the FAFSA covers your child’s details: personal information and dependency status. If your child is male, they must complete their Selective Service registration when they turn 18, however, they no longer need to register for the Selective Service to submit the FAFSA. If your son hasn’t yet registered for the Selective Service, they still may do so on the FAFSA itself (question 22).

 In addition, while FAFSA used to require Selective Service registration to be eligible for aid,  this changed for the 2021-22 award year. The rule was eliminated as a part of the FAFSA Simplification Act of 2020.

The second section is where you’ll enter your information as the parent: your personal details, financial information, and tax forms. You may have the option of using the IRS Data Retrieval Tool (DRT) to automatically import your tax information directly into the form. Not everyone is eligible to use this tool, and even if you are, you may still have to enter additional financial information.

The next section of the form is for your child’s financial information. The financial records required for the FAFSA are those from two years prior, so chances are your child won’t have much to report. However, you shouldn’t just skip this section; make sure to fill in all the information as indicated.

Adding Schools to FAFSA 

Finally, you’ll need to include a list of schools that your child plans to apply to. This helps the government know where to send your financial information so that potential schools can create a financial aid package for your child. 

You must include at least one school on the FAFSA, but you can add up to 10 in the online application. 

You’ll use a Federal School Code for each college you want to share your FAFSA results with. If you’ve already used the government’s search tool to find the Federal School Codes for the colleges you’re applying to, you can enter them directly. Otherwise, you can use the search tool in the online FAFSA application.

If there are multiple schools on the FAFSA, the order they’re in might matter. The order doesn’t matter for federal student aid, but some states use the order the schools are listed in when making decisions about state financial aid. Find out about your state’s policies.

What if you want to add more than 10 colleges to the FAFSA? The online form is limited to 10 schools, and adding more codes will simply replace the codes previously entered. However, once your child receives their Student Aid Report (SAR) back from the government, they can provide the information to more colleges in one of three ways:

  • Log in to the FAFSA account and find the option for Make FAFSA Corrections. Go into the form and replace the school codes from the initial application with codes for the additional schools. Then submit the corrections. (The schools on the original application will have received your child’s SAR already.)
  • With a paper SAR, replace the colleges listed on it with the new ones, and then send the paperback to the Federal Student Aid Office through the mail. (With this method, only four colleges can be added at a time.)
  • Ask the Federal Student Aid Information Center over the phone to add the new colleges. When your child calls, they’ll need to provide the Data Release Number (DRN) listed on their SAR to the customer service representative.

There isn’t a limit to the number of colleges that can receive your child’s SAR.

Before You Submit FAFSA

While you can make edits or corrections to the FAFSA if necessary, it’s best to double-check everything before you submit the form. Ensure that the information is correct; legally, it must be accurate as of the date you sign the form.

How Long Does It Take to Hear Back from FAFSA?

Once the government processes the FAFSA, your child will receive their Student Aid Report. They should get their SAR within a few days (up to two weeks) if they submitted the FAFSA online. If they mailed a paper copy of the FAFSA, the SAR will be returned by mail, which takes longer. 

The SAR doesn’t indicate whether your child is eligible for financial aid. Rather, it shows the government’s view of your financial situation and ability to pay for college. 

The Expected Family Contribution number is what prospective colleges will use to determine if they will offer financial aid (and how much). Your child’s SAR will also have a DRN, which they will need to provide if they contact the financial aid office’s customer service.

Do You Have to Fill Out FAFSA Every Year?

Yes! If you want your child to be considered for financial aid (loans and scholarships), you need to fill out the FAFSA each year. 

The government calculates eligibility for financial aid one year at a time. Fortunately, renewing the FAFSA is less time-consuming than filling out the initial application. 

The FAFSA Is Important for Everyone

Filling out the FAFSA is an essential part of the college application process. It’s vital to submit it even if you think your child won’t qualify for financial aid based on your income and assets. 

The FAFSA is used to determine eligibility for loans, work-study programs, and even scholarships, so it’s important to renew it every year. This form can be the key to reducing the costs of your child’s college education. 

Other Articles About FAFSA:
How to Create the FSA ID
How Long Does it Take for FAFSA to Process?
Reviewing Your FAFSA SAR
Do I Have to Fill Out FAFSA If I Don’t Qualify for Financial Aid?
FAFSA and Divorced Parents
What Happens If I Miss the FAFSA Deadline?
How Does Financial Aid Work? Understanding the System
Do You Have to Pay Back FAFSA?
How to Apply for Financial Aid for College






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